AFTER ACHIEVING 8300 TARGET, NIFTY HEADED FOR 8520; STAY LONG WITH THE STOP LOSS OF 8060

AFTER ACHIEVING 8300 TARGET, NIFTY HEADED FOR 8520; STAY LONG WITH THE STOP LOSS OF 8060

WORLD MARKETS

US indices surged 1.1%-1.4% on Friday, lifting the Dow industrials and S&P 500 to record close, after the Bank of Japan unexpectedly expanded its yearly target for monetary expansion to 80 trillion yen 70 trillion yen, increasing hopes for the global economy.

Economic data had U.S. consumer spending unexpectedly falling in September, a gauge of manufacturing activity in the Chicago region hitting 66.2 in October, better than the estimated 60.0, and consumer sentiment rising to 86.9 in October versus an expected 86.4.

European markets climbed between 1.3%-3.1%. Bank of England announced plans that could mean lenders have to hold more capital to guard again shocks. The rules proved less strict than anticipated, which boosted U.K. banks in particular.

Euro zone inflation ticked up slightly in October, with consumer prices gaining 0.4%. The figure met expectations and marked a slight rise from September's 0.3% gain. However, it remained well below the European Central Bank's target of around 2%.

Dollar index surged to 86.91, marking the highest level since July 2010. Gold tumbled 2.4% to $1273 an ounce. Nymex crude fell 0.4% to $85.9/barrel.

For the week, US indices gained between 2.7%-3.5% and European markets were up between 1.3%-3.8%.

For the month, Dow gained 2%, Nasdaq rose 3.1% and S & P 500 was up 2.3%. European markets however closed lower on the month.

Data on Saturday showed that China’s official PMI fell to a five-month low of 50.8 in October from September’s 51.1.

                                                             

AT HOME

It was a fabulous end to the week and month as benchmark indices surged nearly 2% on Friday, registering the largest gain since 12th May and closing at fresh record high. Sensex soared 520 points to settle at 27866 while Nifty finished at 8322, up 153 points. BSE mid-cap and small-cap indices gained 1.2% and 1% respectively. Except a 3.2% cut in BSE Consumer Durable index, all other sectoral indices ended in green with Capital Goods and Oil & Gas indices leading the tally, rising 2.7% and 2.2% respectively. BSE advance-decline ratio stood at 1.5:1.

FIIs net bought stocks, index futures and stock futures worth Rs 1755 cr, 1485 cr and 322 cr respectively. DIIs were net sellers to the tune of Rs 276 cr.

Rupee appreciated 9 paise to close at 61.36/$.

M & M reported 4.3% dip in September quarter net profit at Rs 947 cr, impacted by weak operational performance. Total income grew better-than-expected 6.9% to Rs 9544 cr. Operating profit however dropped 11.8% to Rs 1009 cr and margin fell 220 bps to 10.6%.

ITC matched street expectations on profit front but topline and operational performance disappointed. Net profit rose 8.7% to Rs 2425 cr. Net Sales grew 14.8% to Rs 8930 cr. Operating margin fell 170 bps to 38%.

For the week, Sensex and Nifty gained 3.8% each.

India's core sector, comprising of eight key industries, grew by 1.9% in September. In August the growth stood at 5.8%.

Oil marketing companies cut Petrol and Diesel price by Rs 2.4/litre and Rs 2.25/litre.

October auto sales were weak. Maruti reported 1.1% dip at 1.04 lac units; M & M sales were down 15.4% at 42776 units. Those of Tata Motors fell 17% to 42819 unit and for Hero Moto, figure stood at 5.75 lac units, down 8.5%. On the brighter side TVS Motor reported 22% rise at 2.4 lac units.

OUTLOOK

China's October final HSBC manufacturing PMI has come in at 50.4, up from September's reading of 50.2 but in-line with the flash estimate.

Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 40 points higher opening for our market.

In Friday's report we had mentioned that "Nifty has given a fresh breakout on the daily chart after a consolidation of nearly a month and half, which suggests much higher levels in the days to come". We had also given immediate target of 8260-8300.

Nifty surged 153 points to end at 8322, achieving this target on Friday itself and vindicating our view.

The breakout mentioned above projects a target of about 8520. On the way down, 8180-8160, the erstwhile resistance zone, would now act as support, with the stop loss of which trading longs should be held on to.